Nissan Board Approves Renault’s Purchase of Major Stake in Firm

As expected, Renault of France agreed today to buy a controlling stake in debt-burdened Nissan Motor Co., Japan’s No. 2 auto maker.

In a statement, the companies announced that Renault will invest $5.1 billion by taking a 36.8% equity stake in Nissan Motor and a 22.5% equity stake in Nissan Diesel, the Japanese firm’s truck affiliate. Under Japanese law, Renault’s more than one-third stake in Nissan Motor will give it veto power over company decisions.

In addition, Carlos Ghosn, executive vice president of Renault, was appointed chief operating officer of Nissan.

Renault Chairman and Chief Executive Louis Schweitzer and his Nissan counterpart, Yoshikazu Hanawa, signed the agreement after Nissan’s board approved it this morning, said Nissan spokeswoman Kaori Tsuji.

Nissan ranks seventh and Renault 11th in the world in the production of cars and trucks, according to industry analysts.

The French auto maker made a formal purchase offer to Nissan on March 16, six days after the breakdown of talks between Nissan and DaimlerChrysler.

Nissan has sought a foreign partner to help it write off debts and return to profitability.